Charlotte Turner www.devonlive.com
Exeter-based Flybe’s request for a £100 million Government loan is set to be scrapped, The Financial Times has reported.
New information has surfaced that the airline’s request for the money has not met certain criteria set by the government according to Whitehall officials.
A potential loan from the state has been on the table for almost two months as a measure to rescue the troubled airline.
The FT also reported that the company’s management is now hoping that a cut to Air Passenger Duty in the Budget will help Flybe to continue to operate.
But in February, it was reported that the new chancellor could throw out the plans for an overhaul of Air Passenger Duty.
Industry sources have said that Rishi Sunak is against a cut to the tax, whereas Mr Javid had supported a reduction to attempt to keep the Exeter-based airline from going down.
Cutting Air Passenger Duty (APD) formed part of the rescue deal discussed by ministers after Flybe came close to collapse in January.
Air passenger duty is a tax on passenger flights from UK airports which was brought in in 1994.
Flybe has reportedly complained for some time that APD of up to £26 per flight disproportionately affects its finances, making its UK low cost short trips less attractive than alternatives.
Flybe was saved from collapse a year ago in February 2019, which saw the airline sold to the Connect Airways consortium, backed by Virgin Atlantic and Stobart Aviation.
Travel experts claim floating on the London Stock Exchange was the start point for many of Flybe’s current issues.
The Devon-based airline has reportedly said that if it were to go under, many of the routes it services would probably be abandoned.
The Financial Times wrote that Flybe’s executives have told the government that 88 of its 120 routes are not flown by any other airline, and that according to rival airlines, Whitehall officials are drawing up plans to ensure routes are kept if Flybe fails.
The Government loan was likely to prove contentious, with government support for Flybe having sparked legal threats from rivals including Ryanair and British Airways’ parent company.
Flybe declined to comment.